Building on the 2023 Mansion House Compact with a new ‘Mansion House Accord’, a group of pension providers has pledged to invest at least 10% of members’ £252bn in their defined contribution defaults in private markets by 2030, including 5% in the UK – with the caveat that there needs to be “sufficient supply of suitable investible assets”.

 

The Mansion House Accord signed by 16 providers and funds – including two that have the same owner – builds on the Mansion House Compact of 2023, when 11 providers promised to invest 5% of £219bn in default funds in private markets. A year later, however, just 0.36% had been allocated by the Compact signatories. 

 

The new Accord is voluntary but follows threats by ministers that domestic investment could be mandated if funds do not support the economy. The iniative has been jointly led by the Association of British Insurers, the Pensions and Lifetime Savings Association and the City of London Corporation. 

 

New signatories compared with the 2023 Compact are: LifeSight; Now Pensions – part of Mercer, which is itself a signatory; Royal London; The People’s Pension; SEI; TPT Retirement Solutions; and the Universities Superannuation Scheme. Scottish Widows, which signed the original Compact, is not a signatory to the new Accord. 

 

For providers signed up to both, progress under the Compact counts towards meeting the Accord’s 10% goal. The wording of the Accord suggests the government and regulators will need to support industry to achieve these aims. It cites a list of “critical enablers” for investors on which reaching the new goals will depend: 

 

  

Chancellor Rachel Reeves welcomed the initiative saying it would “unlock” billions of pounds for infrastructure and start-ups. 

  

Pensions minister Torsten Bell , who had stressed the importance of growing the economy at the PLSA Investment Conference in March, said: “Pensions matter hugely, they underpin not just the retirements we all look forward to, but the investment our future prosperity depends on.” 

 

The chief executive of the Pensions Regulator, Nausicaa Delfas welcomed the Accord while hinting that returns are not guaranteed: “Savers rightly expect good performance from their pension investments. That’s why we welcome this latest initiative, which could both boost returns for pension savers while also potentially unlock more capital for investment in the UK economy.” 

 

Private market assets, such as infrastructure, have long been on the menu plan of pension funds, though more on the defined benefit than the DC side. The introduction of the Long-Term Assets Fund structure has meant that some providers have started including private assets in the default asset mix.  

 

Infrastructure, property and private equity are the most popular asset classes within illiquid assets for DC master trusts, research by consultancy Isio found earlier this year. The study also suggested that UK allocations are mainly to infrastructure and property, while UK private equity allocations are rare. If UK residential property becomes more popular for Accord signatories looking to fill their 5% UK allocation, this could conflict with another of government’s goals, namely keeping up the home ownership rate. 

Under the Accord, private market assets include property, infrastructure, private credit, private equity and venture capital, either directly held or via unlisted funds, with AIM and Aquis Growth Market shares also counting towards the target. 

UK assets are defined as those located in the UK in the case of infrastructure and property. For private equity and venture capital, UK assets are those where the underlying investments are in UK-registered private companies or partnerships. For private debt and credit, UK assets are those where the borrowers are located in the UK.

 

 

Yvonne Braun, director of policy, long-term savings, health and protection at the ABI, said investments under the Accord will be made in savers’ best interests.  

 

“It is now critical that government supports the industry’s ambition, by facilitating a pipeline of suitable investment opportunities, tackling barriers to investments, and delivering wider pension reforms effectively,” she said. 

  

The lord mayor of London, Alastair King, said the Mansion House Accord signals a step change in ambition.

 

“That includes a renewed focus on revitalising the Alternative Investment Market of the London Stock Exchange, as well as the Aquis Exchange, which play a critical role in supporting high-growth companies that drive innovation, jobs and productivity. If we want those firms to scale in the UK, we must ensure they have the capital to do so,” he argued. “This is not just about better pension outcomes, it is about building a more dynamic, competitive investment ecosystem.” 

  

Zoe Alexander, director of policy and advocacy at the PLSA, said the Accord demonstrates the collective ambition of the DC sector to “do even more”, and added: “The government, in its turn, has committed to take action to ensure there is a strong pipeline of investible assets for pension schemes."

 

Those not involved in the Accord were more cautious about its impact and the involvement of government. The Pensions Management Institute’s chief strategy officer, Helen Forrest Hall, said "the real test" of the initiative lies in delivering the regulatory and economic conditions to make UK markets attractive. 

  

“For those running UK pension schemes, the ultimate responsibility is to act in the best interests of members. Pension funds will invest where opportunities align with long-term value and security,” she said. 

  

"Without the right economic conditions, pension funds cannot—and should not—be expected to prioritise UK assets over better-performing alternatives,” she added, remarking that “commitments are easy to sign”. 

 

Lou Davey, who heads up policy and external affairs at trustee firm Independent Governance Group, suggested the priorities need to be clarified. 

 

“The government has made good progress on developing the framework to enable pension schemes to invest, including through the British Growth Partnership, but further clarity around the types of initiatives that government sees as a priority for investment is required,” she said. 

 

Lisa Picardo, chief business officer of provider PensionBee, which did not sign the Accord, warned against government overreach. 

“Investment decisions should be driven by long-term value, transparency and suitability, not political pressure,” she said. 

If private assets genuinely offer an opportunity for strong returns with sufficient liquidity, they will attract capital without the need for compulsion, she noted. 

"However, the threat of mandation forcing schemes to allocate capital is deeply concerning, especially when it relates to private markets assets, where returns can be opaque, costs can be high, and liquidity is limited. Whilst we support efforts to boost UK investment and growth, and to improve returns, legislation must not override a schemes’ duty to act solely in the best interests of its members. That principle must be respected and upheld.” 

Head of DC investment services at consultancy Hymans Robertson, Alison Leslie, agreed mandation cannot be the way forward but is supportive of a voluntary commitment. 

“We have seen great examples of UK investment delivering good returns for local areas through the [Local Government Pension Scheme] pools to date and believe there are good opportunities to invest in the UK for DC savers as well,” she said. 

 

Signatories to the new commitment include:  

 

 

   

     

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